Exam 4: A Model of Production

The following equation is an example of ________: $Y = F ( K , L ) = \bar { A } K ^ { 1 / 3 } L ^ { 2 / 3 }$ .

If MPK > r, the firm:

Which of the following production functions exhibits constant returns to scale?

In the United States, each year of education increases a worker's wage by about ________ per year.

In the United States, the average number of years of education for adults over the age of 25 is about:

In the equation $y = \bar { A } k ^ { 1 / 3 }$ , $\bar { A }$ Represents:

In the equation $Y = F ( K , L ) = \bar { A } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$ , the lack of a "bar" over the L means that it is:

The equation $y = \bar { A } k ^ { 1 / 3 }$ has what two important implications?

The solution to the firm's maximization problem is:

Which of the following are examples of technology?

As a rough approximation, differences in capital per person explain about ________ of the difference in incomes between the richest and poorest countries, while differences in ________ explain ________.

As an economist working at the International Monetary Fund, you are given the following data for Brazil: predicted per capita GDP, relative to the United States, as given by $y = k ^ { 1 / 3 }$ , is 0.56, and total factor productivity is 0.36. What is the observed per capita GDP, relative to the United States?

In the aftermath of the Black Death in the fourteenth century, wages in Europe were higher than before the Black Death because millions of people died.

Exogenous variables are predetermined by the model builder.

A firm's stock price is equal to:

In the equation $Y = F ( K , L ) = \bar { A } K ^ { 1 / 3 } L ^ { 2 / 3 }$ , the "bar" over the A means that it is:

Suppose the payments to capital and labor are (w*L*)/Y* = 2/3 and (r*L*)/Y* = 1/3, respectively. One implication of this result is:

Refer to the following table when answering Table 4.1: Production Model's Prediction for Per Capita GDP (US = 1) Fredicted output Observed per capita, y= per capita GDP Switzerl and 0.966 1.083 United Kingdom 0.828 0.876 Japan 0.760 1.056 Italy 0.686 0.975 Spain 0.661 0.944 Brazil 0.201 0.559 South Africa 0.182 0.546 China 0.172 0.528 India 0.084 0.394 Burundi 0.010 0.180 -Consider Table 4.1, which compares the model $y = \bar { k } ^ { 1 / 3 }$ to actual statistical data on per capita GDP. You observe the model:

Which of the following production functions exhibits constant returns to scale?

In models with perfect competition: